E-Mailbag Tuesday: IPO Predictions, iVillage, Cisco Systems

When do you think Microunity Systems will go public?

Thanks — Pat.

Reply: There is no science to when a company will go public.
Although, a good sign is when a company raises a large amount of venture
capital — say, $30 million or more.

To see the latest IPO filings, I go to Edgar-Online. The “recent filings”
area is found at:


iVillage on a Buying Spree

iVillage is way off from its IPO high. But the company has been making some
acquisitions. What do you think of IVIL?

Reply: One of the key advantages of being a public company is using
stock as currency for acquisitions. With its chief competitor, Women.com,
delaying its IPO,
iVillage (IVIL)
has been quickly taking advantage of the situation and building its

Last week, iVillage purchased FamilyPoint for $26 million. FamilyPoint has
about 700,000 registered users and is a free-flowing community site. With
the myriad of e-commerce and advertising relationships, iVillage should be
able to quickly monetize this huge community of users.

IVillage also purchased Lamaze Publishing for $86.7 million. Lamaze
Publishing has successfully built a well-known brand for expectant mothers
(the natural birth method of Lamaze was developed by — who else? — Dr.
Fernand Lamaze in the 1950s). Assets include videos, magazines, television
shows and toys, which iVillage can transition to the Web.

Both acquisitions make lots of sense. At current valuations, iVillage looks

Cisco At Any Price

Hi Tom,

I purchased Quest Software based on one of your comments and I’m really
glad I did. Thanks. I look forward to your comments more than the millions
of others around.

I’m new to the market having recently inherited some stock from my Dad’s
recent passing and I find the IPO market and the opportunity to get
involved in a future Juniper or Redback intriguing.

Do you think it would be a good investment to purchase Cisco to indirectly
get a benefit from the Cerent acquisition?

Best Regards,

Tom Angone

Reply: Keep in mind that buying Internet and tech stocks involve a
high degree of risk. It is not for the bulk of your portfolio. Having a
diversified portfolio is important.

However, in the case of Cisco Systems (CSCO)
, the company is an Internet blue chip.

No other company has reached
$100 million in market capitalization faster. The reason is simple:
incredible growth. In its latest quarter, sales soared 48% and earnings
38% (for the past year, the company had sales of $12 billion and earnings
of $2.55 billion).

With its power, Cisco wants to invade the telecom world. Currently,
optical fiber networks are highly complex and require expensive equipment.
No surprise, Lucent and Nortel make incredible profits from this market.

Cerent, on the other hand, is cheaper and less complex. It will take time
for Cerent’s technology to penetrate, but it will. This could make the
Cisco’s $6.9 billion acquisition look, well, cheap.

Next, Cisco recently announced a blockbuster deal with IBM. It could mean
$7 billion in extra revenues for Cisco over the next three years.

Moreover, Cisco is the quintessential business-to-business company.
According to BusinessWeek, the company sells 78% of its gear via the Net.
This has meant reduced costs ($1.5 billion so far).

Finally, Cisco has an incredible management team and perhaps the best CEO
in America, John Chambers.

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